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Congressional Tax Bill Fails to Rein in Oil Company Profits Outrage with Oil Profits More Hype Than Action

Posted Oct. 31, 2008 / Posted by: admin

Contact: Sara Zdeb, 202 222-0728 Erich Pica, 202 222-0739

Statement of Erich PicaDomestic Policy Director Friends of the Earth

Given an opportunity to turn the heated rhetoric over oil and gas profits into real action, congressional Republicans backed down to Big Oil. The “The Tax Increase Prevention and Reconciliation Act of 2005” does relatively little to cut oil and gas companies off from taxpayer subsidies.

In the final conference report negotiated between the House of Representatives and the Senate, negotiators stripped out provisions that would have eliminated Big Oil’s ability to use accounting scams and foreign tax deductions to reduce their corporate income taxes. These two provisions would have raised more than $5 billion from major oil and gas companies.

The bill makes some progress in preventing major oil companies from receiving a tax break created in the Energy Bill for costs related to exploring for more oil. But this $189 million change is miniscule compared to the $13 billion in federal tax breaks the oil and gas industry will receive over the next five years.

Last year, the world’s five biggest oil companies—ExxonMobil, Royal Dutch Shell, BP, ConocoPhillips and ChevronTexaco—recorded a staggering $111 billion in profits. For the first quarter of 2006, these same companies recorded almost $28 billion in profits.